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Stealth ‘Bull Market’ In Stocks Still In Progress!

Elliott’s theory is based on the Dow theory in that stock prices move in waves. Because of the “fractal” nature of markets, I have broken them down so that you can trade a daily complete wave count. Fractals are mathematical structures, which on an ever-smaller scale infinitely repeat themselves. Elliott discovered stock-trading patterns were structured in the same way.

This week will be very interesting in the markets. You need to understand what the markets are telling you. The markets are at anextreme”. I trade the most profitable waves, which are impulsive waves 1,3 and 5. It takes time to develop these great trades, but it is worth the wait as you observe the profits rolling in. Do not get caught up on the wrong side of the trade. Timing the waves correctly is a critical factor for creating these profitable 1trades.

The Corrective Waves are not as easy to identify as the Impulse Waves because the Corrective Waves have more variations as compared to the Impulse Waves. Corrective Waves of any trading pattern are broadly termed as the “ABC Corrections”. Corrective Waves are always the three wave patterns that unfold in the direction opposite of the larger trend.

“ABC Corrections” is the broad name given to the Corrective Waves. The corrective patterns formed by the Corrective Waves are against the direction of the trend. Wave 1 is corrected by the Wave 2 and Wave 3 is corrected by the Wave 4. After wave 5, the wave pattern finishes and the entire move which will be corrected. This correction will occur a multiple wave move. ABC” numbered waves are also the Corrective Waves.

Based on research that I have just completed, when the January and February months are both bullish, the equity markets moved much higher for the rest of the year! (http://www.marketwatch.com/story/still-room-for-stock-bulls-to-run-as-historic-breakouts-take-shape-analysts-say-2017-02-23/email).

The SPY Fund Flow represents the weekly flows in and out. This is a ‘Contrary Indicator’. When it becomes extremely pessimistic, I then look for a reversal to the upside. When fund flows are very high, I become concerned about a correction as expectations may have become too optimistic.

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The total put/call ratio is the volume of puts divided by the volume of calls traded on individual equities on the Chicago Board Options Exchange, on any given day.  Generally speaking, heavy volume in put contracts shows large-scale fear by options traders, while heavy call volume is usually a reflection of increased investor optimism in regards to rising prices.  When there is heavy put buying and low call buying, the put/call ratio will be high. When an extreme is reached, this becomes a bullish contrarian indicator and we should expect higher market prices ahead of us. When option traders are optimistic and there is low put volume in relation to call volume, then the put/call ratio will be low and we may be nearing a market high.  The interpretation of this indicator is the same as the equity put/call ratio itself – high readings show fear and are generally bullish for the market. Low readings, show excessive optimism as the market typically declines after they are seen.

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The GLD Fund Flow Weekly Indicator represents the daily flows into and out of GLD: (http://www.wikinvest.com/wikinvest/api.php?action=viewNews&aid=8343471&page=Stock%3ASPDR_Gold_Trust_%28GLD%29&comments=0&format=html).

Contrary Indicators are measuring the fund flows. When it becomes extremely pessimistic, then I begin to look for a possible reversal to the upside. When fund flows are very high, then I become concerned about a correction as expectations have become too optimistic. Why gold is great again: (https://www.forbes.com/sites/ralphbenko/2017/02/25/president-trump-replace-the-dollar-with-gold-as-the-global-currency-to-make-america-great-again/#23cdf01f4d54)

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The Commitment of Traders (COT) Indicator gives you the overall picture of what is happening behind the scenes. It tells you who is buying and who is selling!  This information is an important key for your trading success!

The commercial traders are considered the “Smart Money”. The chart below displays, as of February 21st, 2017, that the commercial traders have taken new long positions.  This matches up perfectly with my long-term Elliot Wave forecast of 2550, in the SPX.

 

Red Bars: The Commercial Traders
(i.e.: Farmers, Hedgers, Producers, and Factories)

Blue Bars: The Large Speculators
(i.e.: Banks and Large Financial Money Managers)

Green Bars: The Small Speculators
(i.e.: You and me)

Yellow Line: The overall open interest in the market.

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The next setup for going long on Natural Gas.

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The U.S. dollar: Waiting for trend confirmation.

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Learn how to build wealth during 2017!

Every week, there are new actionable trade ideas. Avoid what I refer to as “Herd Mentality” which will put you on the losing side of the trades more often than not.

Our most recent trade was UGAZ:( http://etfdb.com/etf/UGAZ/) on February 21st, 2017. We sold half of this position to lock in a quick 10+% profit in two days. Previous trades generated a 112% profit within 25 days (NUGT), and 7.7% profit (ERX) within 24 hours.

 

Stock Market bulls will continue their historic breakouts!

The Trump Administration’s promises of tax cuts and regulatory easing is the catalyst for the markets’ recent strong advance. Mr. David Dodd’s timeless classic saying: “The market in the short term is a voting machine, but in the long run it is a weighing machine”. This is the second most bullish market, after an election, since President Kennedy took office.

The Research Investment Committee commented “Monetary, fiscal and regulatory policies could be key drivers in 2017, but the timing of those actions could cause volatility”.  New regulatory action will favor many stocks in the financial and energy sectors. Repatriation will occur under President Trump’s new corporate tax plans. The U.S. currently operates under a tax system in which the domestic earnings of U.S. corporations are taxed at the federal U.S. corporate rate (35%) and any overseas earnings that are repatriated are taxed at this rate less a credit for foreign taxes paid on those same earnings. Foreign earnings have been parked offshore, allowing corporations to avoid the taxes associated with bringing them back to the U.S. These U.S. Companies would be granted an eight-year period to pay their tax liability. President Trump’s plan calls for a one -time deemed repatriation of overseas corporate profits at a 10% tax rate.

 

Conclusion:

In short, the US stock market is back in full blown bull market with truck reenergizing things. While I feel a short-term correction is due any day, it is just that, a short-term pullback followed by higher prices into June/July.

Tuned For More Analysis and Trades at: www.ActiveTradingPartners.com

Chris Vermeulen

 

 

The Trump Rally Is Just Getting Started!

Have you ever been presented with an opportunity and missed out on it?  Well, here is an opportunity you Do NOT want to miss out on.

Based upon my unique “Cycle Analytical” work combined with my “Proprietary Predictive Analytics Model, I can assure you that there are new highs to be made in the U.S. stock. Appling my unique metric, which are not available to the public, I can inform you that the stock markets are not overbought or overextended, at present. The market remains in a clear bullish trend!  This next new leg is very sustainable!

 

Technically Speaking, It Is Now Back To “Buy The Dip”:

The SPX, Dow Jones and the Nasdaq Composite all closed at new all-time highs last Friday, February 10th,2017.  The Trump Rally is just getting started according to Bloomberg.

Investors should expect that the global markets will continue their bull market run throughout the first half of 2017 rather than forming a top which leads to a bear market. “Extremes” have lost their’ meanings, at this point. The Federal Reserve has given the green light to major banks in the U.S. to raise dividends and buy back shares of their companies. The huge thrust in momentum has now returned to the four U.S. stock indexes.

Nicholas Teo of KGI Securities said that: “Ever since his victory in November, global stock markets have been steered by actions events rhetoric emanating from the new commander-in-chief”.

The trigger events show the willingness of the markets to give the Trump Administration a lot more ‘slack’ as we engage into 2017.  Billions of dollars are continuing to flow into the U.S. real estate market from Chinese nationals. They are using their offshore cash reserves to make payments on the properties they have speculated on in the U.S. There are also big-money speculators who have the sophistication needed to circumvent China’s Capital Controls.

Blackrock estimates that there is a whopping $50 trillion in cash “sitting on the sidelines”. This money has come from global central-banks, financial-firm reserves and consumer savings accounts.  Blackstone is keeping nearly one-third of its’ assets in cash. Fund managers have increased their reserves to levels that equal the highest since 2001. This means that there is a lot of liquidity with nowhere to go, but UP.

We are still in the early days of the new Trump Administration and everything seems to be going his way. President Trump’s proposed economic policies are being well received by U.S. businesses, especially Wall Street big banks. His plans are certainly positive – such as deregulation, defunding of various useless federal agencies, simplification of the tax code and lowering taxes. Many people, including some of the best money managers, in the world, are at a loss trying to figure out where to put their money, right now.  However, all that you need to do this year is to follow my lead as I strive to make profitable returns and be on the right side of all markets, and you cannot afford to miss any hugely profitable setup this year!

 

All of the indicators continue to suggest higher prices ahead! 

The Elliott Wave Principle is a description of how groups of people behave. It reveals that mass psychology swings from pessimism to optimism thereby creating specific and measurable patterns. In the chart below, repeating patterns in prices are displayed showing where we are located at any given time. In those repeating patterns, I can predict where we are going next.

 

Wave 5:

Wave 5: Wave five is the last leg in the primary direction of the dominant trend.  Wave 5 advance is caused by a small group of traders. Prices will make a new high above the top of wave 3.

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How To Make Money In 2017!

Do you trade like the professionals do? Most traders make the same mistakes – which is why they consistently lose money!  Implementing my winning strategy by receiving SMS text alerts every time we enter or close a trade is the best way to get you setup and be profitable on the same day!  Trading and focusing on my Momentum Reversal Method (MRM) and trading just the hot stocks and sectors for quick oversized gains is my expertise. Therefore, these momentum trades are moving significantly in one direction on heavy volume. The length of time for which I may hold a momentum trade depends on how quickly the trade is moving with trades lasting 3-25 days in length and we look for a7%- 35% potential gain.

Momentum traders are truly a unique group of individuals. Unlike other traders or analysts who dissect a company’s financial statements or chart patterns, a momentum trader is only concerned with stocks in the news. These stocks will be the high percentage and volume movers of the day/week.

Read more: Momentum Traders | Investopedia http://www.investopedia.com/university/introduction-stock-trader-types/momentum-traders.asp#ixzz4YY8FK9VY
On February 8th, 2017, myself and subscribers closed out our NUGT trade for a 112% profit that we entered into on December 16th.2016,

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Sometimes stocks move very fast.  As I enter any new swing trades, I will immediately send out these alerts to you on your mobile device.

On February 8th, 2017, we entered the ERX at $33.00.  Right after we got into this trade, ERX, (http://etfdb.com/etf/ERX/), we were up 6% to 8% and we closed half our position.  Instantly receiving these alerts on your mobile device can make a huge difference in both time and profits as you saw in the ERX setup!  I always send out my swing trades to my members by SMS, but keep in mind most trades can be entered within a 1-3 day period as I don’t catch exact market bottoms or tops.

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America Is Happy, Again!

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A recent Gallup Poll reported that American’s confidence in the U.S. economy remained strong in January of 2017. Gallup’s U.S. Economic Confidence Index averaged +11, which is the highest monthly average reached in Gallup’s nine-year trend. I just came across this video that is enough to make you start thinking about changing your long term portfolio asset allocation – Watch Video Here

 

So, if you are looking for a simplified and highly accurate pulse on the markets, along with timely swing trades, I urge you to join my newsletter at www.ActiveTradingPartners.com.

 

Chris Vermeulen

VIX Cycles Set to Explode in March/April 2017 – Part 1

My recent analysis of the markets has shown what I believe to be an explosion in market volatility set to starting happening between February 21, 2017 and March 30, 2017.  The historical VIX cycles have been running about 18~22 week intervals for expansion and extreme volatility levels.  The period August 2015 to January 2016 represented roughly 5 months.  The period between January 2016 to June 2016 represented roughly 5 months.  The period between June 2016 to Early November 2016 represented roughly 5 months (just a little short of 5 months in reality).

 

The period between November 2016 to the next volatility expansion phase, if this cycle continues, should be March/April 2107 at a target date range.

2017-calendar-1468440983V9p

How will this relate to the US major markets?  I currently believe the recent “melt-up” will stay in place until we have some catalyst that will change the direction of the markets.  In other words, the path of least resistance in the US major markets is upward right now – at least till something changes that direction/sentiment. The VIX cycles may be related to some catalyst event or external foreign market event that could change the major market directions – nut only time will tell.

 

VIX_Weekly

 

 

Currently, on the below DIA chart, I can state that my estimates for upside resistance is 210~212 based on historical price action.  The reason I believe these levels will become upside target objectives is based on my understanding of price rotation, expansion and contraction as well as Fibonacci ratios.  The actual number that I believe will be resistance is 211.63 and I believe this level will be reached in March 2017 or early April 2017.

 

DIA_Weekly

 

Once this critical resistance level is reached in the DIA, then all bets are off in terms of the price retracement/rotation that may occur.  Given historical price rotation as examples, I would estimate that the DIA could retrace a minimum of 6~8% ($13 to $17).  A moderate price rotation would equate to a move of 10%~13.5% ($21 to $28).  Beyond these expected levels of support, all bets are off in terms of downside potential.  The closest major downside support levels are $178.25, $170.30 and $154.35 – these levels represent a greater than 15% total price retracement and would put us dangerously close to “Bear Market Territory”.

 

Of course, if the VIX cycles persist as I suspect, a massive increase in volatility will drive other markets into further trending or price rotation as well.  The tech heavy NASDAQ (QQQ) has been mirroring the DIA and my projected top level is 128.15.  Currently, the QQQ is at $126.54 – only $1.65 (or 1.33%) away from my expected peak level.  After these peaks have been reached, I expect the major market to take pause and attempt to resume trending as we move closer to the volatility cycle period I suspect is driving the VIX (March/April 2017).  It is because of this that I’m issuing this warning to my members to be cautious of extended risk or exposed positions as we near the end of February 2017.  I believe the old term, “Beware the ides of March”, may be a harsh reality this year.

 

QQQ_Weekly

 

As I continue my extended analysis of the US major markets and commodity markets in relation to these VIX cycles, I will post “Part 2” of this article within a day or so.  I wanted to get this out to all my members and associates so they were brought aware of the fact that the markets are beginning a phase of volatility expansion that should not end till near April 1st, 2017.

 

In short, what does all this mean? Well, it means now is not the time to be adding new long equity position for long-term growth. Going forward, its going to be all about active trading and focusing on my Momentum Reversal Method (MRM) and trading just the hot stocks and sectors for quick oversized gains.

 

On Feb 8th, myself and subscribers closed out our NUGT trade for a 112% profit that we entered December 16th.

atp-nugt

 

This week we got long ERX at $33, and sold half the position 24 hours later for another quick 7.7% profit and there is still a lot of room for bigger gains there.

erxprofit

So, if you are looking for a simple and highly accurate pulse on the market along with timely swing trades I urge you to join my newsletter at www.ActiveTradingPartners.com – STAY TUNED FOR PART II…

 

Chris Vermeulen

Market Melt-up Brings Volatility to Metals

Our recent analysis bases on a previous report of the potential for a further run in the US markets based on a number of technical and fundamental factors leads to the question of “what could happen with Gold and Silver”.  A broad US market rally may put some pressure on the metals markets initially, but, in our opinion, the increase in volatility and uncertainty will likely prompt more potential for upward price action in precious metals.

 

As with most things in the midst of uncertainty and transition, the US Presidential election has caused many traders to rethink positions and potential.  As foreign elections continue to play out, wild currency moves are starting to become more of a standard for volatility.  Combine this with a new US President and a repositioning of US global and local objectives and we believe we are setting up for one of the most expansive moves in recent years for the US general markets and the metals markets.  This week, alone, we have seen a flurry of action in DC and the US markets broke upward on news of the Dakota Pipeline and other Executive actions.

 

As we wrote week or so ago, we believe the US markets will push higher in 2017 a business investment, US strategy and foreign capital runs back into the US equity market chasing opportunity and gains.  Additionally, we believe the strength of the US market, paired with continued strength of the US Dollar, will drive a further increase in global volatility and wild swings in foreign markets.  This volatility, uncertainty and equity repositioning will likely drive Gold and Silver to continued highs throughout 2017 – possibly much longer if the new trend generates renewed follow-through.

 

Our belief that the US markets will continue to melt-up while certain foreign markets deteriorate relates to our belief that currency variances will become more volatile and excessive over the next few months.  This, in combination with a renewed interest in developing US economic solutions, will likely drive the US markets higher while the metals markets will continue to become a safe-haven for US and foreign investors to protect against deflation and foreign market corrections.

 

S&P Futures are setting up a clear bullish pennant/flag formation that will likely prompt an explosive price move within 2~3 weeks.  This bullish flag formation is likely to drive the ES price higher by roughly 100+ pts.  Currently, strong resistance is just above 2275, so we’ll have to wait for this level to be breached before we see any potential for a bigger price move.

 

SP500 Weekly Chart
ES_Weekly2

 

SP500 Daily Chart

ES_Daily

GOLD is channeling in a very clear and narrow upward price channel and trading in the middle of a support zone.  The recent reversal, near the end of 2016, was interesting because GOLD trailed lower after the US election, but then reversed course just before the new year.  The interesting fact about this move is that this new upward swing in GOLD correlates with the beginning of the Bullish Flag in the S&P Futures as well as a decrease in volatility.  We believe as this Bullish Flag will prompt a jump in volatility and price action that will result in is a strong push higher in GOLD.

 

GOLD Weekly Chart
GC_Weekly

 

Gold Daily Chart

GC_Daily2

 

SILVER is setting up in a similar manner as GOLD.  Although the SILVER chart provides a clearer picture of the downward price channel that is about to be breached – and likely drive both SILVER and GOLD into a new bullish rally.  The support Zone in SILVER, between $16.60 ~ $17.40 is still very much in play.  SILVER will likely stay within this zone while the Bullish Flag plays out.  Yet, when the breakout begins, a move above $18.00 will be very quick and upside targets are $18.50~18.75 and $19.50~$20.00 (possibly much higher in the long run).

 

SILVER Weekly Chart
SI_Weekly

 

Silver Daily Chart
SI_Daily2

 

EUR/USD correlation to the US moves should be viewed as measure of strengthening US economy/USD as related to foreign market volatility and potential.  As the USD strengthens, this puts pressure on foreign governments and global transactions based in USD.  This also puts pressure on the METALS markets because billions of people around the globe consume precious metals as a “safe-haven” related to currency volatility.  We expect the EUR/USD levels to fall near “parity” (1.00) again and possibly dip below parity based on future foreign election results.  This volatility and uncertainty will translate to increased opportunity for GOLD and SILVER to run much higher over the next few months.

 

EURUSD Daily Chart

EUR_Daily2

 

USDMXN Daily Chart

USDMXN  

USDGBP Daily Chart

USDGBP

 

Right now is a fantastic opportunity to take advantage of these lower prices.  We may see rotation near to the lower support zone levels as price rotates over the next few weeks.  The key to any trade in the metals market is to understand the potential moves and watch for confluence and volatility in other markets.  We believe the next few weeks/months will be very telling.  If we are correct, we’ll see new highs in the US markets fairly quickly and we’ll see a new potential bullish breakout in GOLD and SILVER.

You can follow our weekly analysis and trade ideas at www.TheMarketTrendForecast.com

Chris Vermeulen & John Winston

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The New Gold Rush Of 2017!

Gold to Regain Its Gleam!

One question that gold investors are asking now is, will 2017 be as spectacular for the yellow metal as it was in 2016? The short and sweet answer to this is YES.

The dollar, gold and the major U.S. stock exchanges will all see new highs. Gold is currently in a “complex corrective correction” while experiencing its’ last pullback, beforehand.

Both the short-term outlook and the long-term outlook for gold is BULLISH!  Trumps’ victory win is a positive for gold bulls. Policy uncertainty and slowing growth, following a Trump win, will stoke the yellow metals’ price in 2017.

Gold prices have been under pressure since the Trump victory, but the long-term scenario for gold is that it is parabolic. The global economy is still in contraction. Global Center Bankers continue with monetary easing, leading to currency debasement. Interest rates continue to slide into negative territory in Europe and Asia.  Gold’s investment appeal will encounter a period of time before it generates positive yields. Gold, as an investment, will once again be back in vogue. As prices rally, investment demand will only rise further, taking everyone by surprise.

The demand for gold jewelry has been declining within the large gold-consuming nations. The gold investors will call the shots in this new ‘bull’ market of gold.  Current supply constraint has cushioned gold prices from the rally in the U. S. dollar.

This is the last great buying opportunity for gold before it makes its’ next historic run in 2017 and beyond.

 

Excessive Pessimism: 2.0
THIS IS WHEN THE BEST OPPORTUNITY TO BUY GOLD IS PRESENTED

Latest Value(s):

– Last Reading: 1.0

– Extreme Values:

– Excessive Optimism: 8.0

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Excessive Pessimism: 30:
THIS IS WHEN THE BEST OPPORTUNITY TO BUY GOLD IS PRESENTED

Latest Value(s):

– Last Reading: 34.0

– Extreme Values:

– Excessive Optimism: 75.0

– Excessive Pessimism: 30.0

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Gold Hedgers Positions

Latest Value(s):

– Last Reading: -134022.0

Extreme Values:

The green dotted line is 1 standard deviation above the 3-year average;
the red dotted line is 1 standard deviation below the 3-year average.

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The Drivers!

A key factor that has driven investments in gold is the negative interest rate in Europe, Japan, Denmark, Sweden, and Switzerland. The sovereign debt of approximately one third of the developed countries traded with a negative yield while an additional 40% of the countries had yields below 1%.

Gold prices will be driven more by its’ value as an ‘investment asset class’. Gold will supersede investments in other ‘asset classes’ such as equity and bonds in due time.

The massive U.S. debt continues to spiral out of control. The Treasury Department’s printing presses are cranking out hundreds of billions of dollars in new money. European countries are imploding financially and the entire European Union is at risk of a collapse.  These ‘geopolitical’ factors will be driving the demand for gold as a ‘safe haven”.

The global ‘retail’ investment market is well positioned for growth what with demand for gold in China, India, Germany and the U.S. for 2017.

Social media is a ‘key driver’ which is critical in both China and India. Financial advisors and financial websites are the key drivers in the U.S. markets. In Germany, banks play the most important influence; ‘Protect wealth against the system’.  It has a competitive advantage compared to other investment options.

 

Jordan Eliseo, Chief Economist at precious-metals dealer ABC Bullion, says “Gold retreated about 18 percent from its year-to-date high. Afterward, it gained 26 percent in the first half of 2016.  The decline so far, this year has been about 15 percent from its year-to-date high.  Gold, is setting up for another rally in fashion like last year. The recent correction has already drawing in some investors to buy what they see as cheap metal.”

 

On December 14th my trading partner accurately forecasted the recent bottom in gold which you can see in this gold market forecast.

December 14th Forecast chart:

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He then took things a step further and entered into a NUGT (3x long gold miners ETF) with subscribers and recently locked in 50% profit on the first half and is up over 70% on the balance as of Fridays closing price.

 

 

GOLD WEEKLY CHART REMAINS IN DOWNTREND

The constructing on this new infrastructure is going to require a lot of new money. The country is already close to $20 trillion in debt, so if the administration plans to make this one of their priorities, it is going to have to print it.

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‘THE GREAT RESET’

Nixon closed the gold window on August 15th, 1971 and consequently, the world entered a new era.  For the first time in history, all the world’s monies were unbacked fiat currencies, adrift on a sea of floating exchange rates.  This stopped the redemption of currency for gold. Today, gold reserves are nothing more than an asset listed on the FEDS’ balance sheet.  Gold had stopped being an integral part of our financial monetary system

At the top of international commerce, money managers had always known the dangers of ‘currency risk’, but now every currency has become a ‘soft currency’. Recognition of ‘currency risk’ seeped down into the knowledge chain, but on the street of personal financial management, despite it being 45 years later, not many have caught on to the concept.

 

To Live And/Or Continue Living the American Dream

Golds’ strength is in the role of ‘wealth protection’. It is a ‘safehaven’ and its ‘independence’ from the global financial system makes it a great investment for the future. Gold is still good value for those who do not own any to accumulate ounces.

In a few days, I will be publishing a piece talking about the shift in the economy and what I call “The Great Transfer of Wealth”. Be sure to join my free newsletter below to receive this special report!

Chris Vermeulen
www.TheGoldAndOilGuy.com

Stocks and Commodities Going Up & Up

Chris Vermeulen is a very savvy trader and even he was taken by surprise by the stock market’s Trump rally. Especially by its strength and ferocity and he sees no immediate end in site. It could go on and on. But it won’t necessarily be bad for commodities and precious metals. He’s seeing very bullish signs in those markets as well. So are we living in the best of all possible worlds?

listen-live-button

Trade Alerts @ www.ActiveTradingPartners.com & www.TheGoldAndOilGuy.com

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Gold, Silver and Miners in Stage 1 Accumulation Mode

We don’t hear much about gold and silver anymore on the news. This time last year you could not go 5 minutes without a TV or radio station talking about them. Why is this? Simple really, precious metals have been building a Stage 1 Basing Pattern for the last 12 months. This boring sideways trading range is how the market gets most of those long holders out of an investment before it starts another move up. The saying is “If the market doesn’t shake you out, it will wait you out”.

We all know time is money so the above statement makes a lot of sense doesn’t it? Instead of having your money sitting in an investment that has clearly displayed a large sideways range with month and possibly years before any significant breakout will occur, why would you want their money in it doing nothing? There are other opportunities which you could be putting your money into that could generate more gains until the precious metals sector sets up with a high probability trading pattern.

The good news is that gold, silver and precious metal miner stocks are forming a very large Stage 1 Accumulation pattern on the weekly chart. This points to a multi month rally in prices if they breakout above our resistance levels.

 

Gold & Gold Miner Stocks Weekly Analysis:

The chart below shows a lot of analysis and to the untrained eye this may look messy and confusing, so take your time to review it. In short, what I am showing are sideways price patterns using the previous highs and lows for support and resistance levels. The analysis shows the shift in prices from bearish (down), to Neutral (sideways). The exciting part about this pattern is that a new bull market should emerge if my analysis is correct. Now, I’m not talking about 5 -10% move here, I’m talking about a multi month and possibly a yearlong rally in precious metals that could allow some individuals to retire early if played properly…

A break above our red dotted resistance lines should trigger aggressive buying in gold miners along with physical gold bullion.

Gold Miners ETFs

In the past month I have been giving out some of my Stage 1 trading ideas which have generated some decent gains for those who follow along. All but one have generated gains with FSLR 12.5%, FB 12%, RIMM 54%, AAPL 5%, TLT 2.5%, XLU 1.5%, and KOL down -5.2%. Keep in mind that you can follow my trading charts live for free and get some of my stock and ETF trading ideas here: https://stockcharts.com/public/1992897

 

Silver & Silver Miner Stocks Weekly Analysis:

This chart of silver and silver miner stocks (SIL), shows a very similar pattern to that of its big shiny sister (Yellow Gold). Silver carries a lot more risk because of its industrial usage. Also this commodity is thinly traded and can move very quickly on a daily basis compared to gold. Because of these quick price movements it has attracted a lot of speculative money which also has increased the volatility. More often than not silver will move 2-3 times more on a percentage bases than that of yellow gold.

Silver Miners ETFs

 

Battle of the Miner ETFs Weekly Performance:

This chart compares three precious metals miner ETFS (GDX – Gold Miners, SIL – Silver Miners, NUGT 3x Leveraged Gold Miners).

Silver miners have held up the best because the herd saw how big the move was a year ago and are front running the next potential rally. But, depending on how you read the charts and sentiment it may be pointing to the dormant gold miners for a bigger than expected rally. But debating which one will breakout and run the most is a conversation/debate of its own and even I can argue both sides. The safe play is that even if gold miners (GDX & GDXJ) underperform the silver miners (SIL), the NUGT which is 3x leveraged gold miners should be the same if not outperform silver miners.

Precious Metals Mining Stocks

 

Precious Metals & Miners Trading Conclusion:

In short, I favor trading the miners over physical bullion simply because the charts show much more profit potential than if one was to buy the bullion exchange traded funds GLD and SLV.

The market seems to be setting up for some very large moves in 2013 and members of my trading newsletter should do very well. Be sure to join and follow along at www.GoldAndOilGuy.com

Chris Vermeulen

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Gold and Copper Rising Due to QE3 Hopes

There should be an inverse relationship between gold (NYSEARCA: GLD) and copper (NYSEARCA: JJC).

Most of gold is used for investment purposes.  As a result, it rises when there is economic weakness and investors lose confidence in the fiat currency of a country.  Most of copper is used for industrial purposes.   Therefore, the price of The Red Metal should increase when economies are booming, as there is a greater demand for it from the factories operating at full throttle and for the buildings being constructed.

Gold Bullion Prices

Gold Bullion Prices

As the chart below evinces, the inverse relationship between the exchange traded for gold, SPDR Gold Shares, and the exchange traded fund for copper, iPath Copper, has broken down due to traders positioning themselves for the introduction of Quantitative Easing 3 when Federal Reserve Chairman Ben Bernanke speaks at Jackson Hole this Friday.

Continuing economic weakness in the United States will almost certainly lead the Federal Reserve to act in way that is more powerful than Operation Twist, the selling of short term securities to buy those with a longer term.   Based on the most recent data, economic growth in the United States is falling as the unemployment rate is rising.  A recent statement by the Federal Reserve was unusually clear in calling for greater action.

Both the JJC and the GLD have risen together as traders expect more economic stimulus from the United States Government.  This will weaken the US Dollar and raise the price of commodities, as happened with Quantitative Easing 2.  During the period of Quantitative Easing 2, from November 2010 to June 11, the US Dollar fell in value and the GLD and the JJC soared, along with other commodity prices, particularly oil.  This pattern is being repeated as traders are preparing for the initiation of Quantitative Easing 3 when Bernanke speaks Friday, or at the next Federal Open Market Committee meeting.

Gold Spot Price Chart

Gold Spot Price Chart

 

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Gold Mining Stocks Continue to Disappoint But Not For Long

Chris Vermeulen – www.TheGoldAndOilGuy.com

It is an endless debate for investors interested in gold. Should they buy a direct play on the gold price, either gold bullion itself or even so-called paper gold with an ETF such as the SPDR Gold Shares (NYSEArca: GLD)? Or should they invest into gold equities, particularly the larger, higher quality gold mining companies?

Recent history suggests the answer is gold itself. According to Citigroup, physical gold has outperformed global gold equities 120% percent of the time over the past 5 years. Stocks of the bigger gold mining firms seem to react adversely to bad news (which is normal), but the problem is they react with no more than a yawn to good news. These type of stocks are contained in the Market Vectors Gold Miners ETF (NYSEArca: GDX).

Gold Mining Stocks ETF - GDX

Gold Mining Stocks ETF - GDX

Evidence of this trend can been see in the latest news to hit the industry…the slowdown in expansion as recently signaled by the world’s largest gold producer, Barrick Gold (NYSE: ABX). The company’s stock has fallen by more than 30 percent over the last year due to cost overruns at major projects. The latest blowup in costs of up to $3 billion occurred in its estimate for development of its flagship Pascua-Lama project on the border of Chile and Argentina. The project may now cost up to $8 billion.

In addition, Barrick decided to shelve the $6 billion Cerro Casale in Chile and the $6.7 billion Donlin Gold project in Alaska. Barrick is not alone in its thinking among the major gold producers. The CEO of Agnico-Eagle Mines (NYSE: AEM), Sean Boyd, recently said “The era of gold mega-projects may be fading. The industry is moving into an era of cash flow generation, yields and capital discipline.”

Fair enough. But are gold mining companies’ management walking the walk about yields or just talking the talk? Last year, many of the larger miners made major announcements that they would be focusing on boosting their dividends to shareholders in attempt to attract new stockholders away from exchange traded vehicles such as GLD, which have siphoned demand away from gold equities. Barrick, for example, did boost its dividend payout by a quarter from the previous level. Newmont Mining (NYSE: NEM), which has also cut back on expansion plans, has pledged to link its dividend payout to the price of gold bullion.

So in effect, the managements at the bigger gold mining companies (which are having difficulties growing) are trying to move away from attracting growth-only investors to enticing investors that may be interested in high dividend yields. This is a logical move.

But rising costs at mining projects may put a crimp into the plans of gold mining companies’ as they may not have the cash to raise dividends much. And they have done a poor job of raising dividends for their shareholders to date. In 2011 the dividend yields for gold producers globally was less than half the average for the mining sector as a whole at a mere 1.3 percent. Their yields are below that of the base metal mining sector and the energy sector.

It seems like management for these precious metal companies have the similar emotional response shareholders have when they are in a winning position. When the investor’s brain has experienced a winning streak and is happy it automatically goes into preservation/protection mode. What does this mean? It means management is going to tight up their spending to stay cash rich as they do not want to give back the gains during a time of increased uncertainty. Smaller bets/investments are what the investor’s brain is hard wired to do which is not always the right thing to do…

Looks like there is still a lot work to be done by gold mining companies’ to improve returns to their shareholders. But with all that set aside it is important to realize that when physical gold truly starts another major rally. These gold stocks will outperform the price of gold bullion drastically for first few months.

Gold Stock Rally

Gold Stock Rally

 

Gold Miner Trading Conclusion:

In short, last weeks special report on gold about how gold has been forming a major launch pad for higher prices over the past year. Gold bullion has held up well while gold miner stocks have given up over 30% of their gains. If/when gold starts another rally I do feel gold miner stocks will be the main play for quick big gains during the first month or two of a breakout. The increased price in gold could and value of the mining companies reserves could be enough to get management to start paying their investors a decent dividend which in turn would fuel gold miner shares higher.

Both gold and silver bullion prices remain in a down trend on the daily chart but are trying to form a base to rally from which may start any day now. Keep your eye on precious metals going into year end.

If you would like to get my weekly analysis on precious metals and the board market be sure to join my free newsletter at www.TheGoldAndOilGuy.com

Chris Vermeulen

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The Dow, Dollar & Gold – What Goes Down Must Come Up

This year has been a very exiting time for traders and investors. We have seen a steady climb in prices with controlled pullbacks in the broad market and gold.

Using technical analysis we are able to quickly and accurately make informed decisions just from looking at the charts. In the charts below you will see how simple chart patterns along with support & resistance levels can provide excellent low risk entry points. Also you will see how candle stick charts can be an early indicator for prices to reverse direction.

DIA ETF – Daily
The DIA (Dow Jones Index Fund) is trending higher. By applying some basic technical analysis you are able to time your entry points having the odds in your favor.

In this chart I use two simple forms of analysis. The broadening formation (red trend lines), and horizontal support zones shown in blue.

Broadening Formations: This is when the price becomes more volatile making higher highs and lower lows. I think of it as one of those Megaphones for talking to large groups of people. So when a chart has this pattern it’s virtually yelling at me and I start taking profits or tightening my stops.

Horizontal Support Zones:
I like to focus on support or resistance zones which are a little different than most traders. I do not use the top and bottoms of previous waves for these levels. Instead I take the average price then expect the support level to be penetrated somewhat as the level is tested. This is how the market keeps you out of the good trades. I cover this in great detail in my Stock Market Trading Education Course available in January.

Analysis:
The DIA ETF looks ready for a pullback to the $99- 100 level.

DIA ETF

DIA ETF

GLD Exchange Traded Fund – Weekly
Gold has been on fire and riding this wave up has been very profitable thus far. Last week a doji candle was formed on the chart and this can signal a change in short term price action.

This chart shows some of the past doji candles and what happened to the price of gold soon after. What this candle is telling us is that the buying and selling pressure is equal. So we know momentum is slowing and we should expect a consolidation or correction.

Because gold has rocketed higher, indeed going almost straight up in the recent weeks, I expect a pullback to be very quick. A drop to the $110 or even the $100 level in the coming weeks is not out of the question, but we all know commodities can go parabolic for several months (straight up). This is why we continue to tighten our stops and keep holding out long positions.

Gold Exchange Traded Fund

Gold Exchange Traded Fund

US Dollar – Weekly
The US dollar has been up and down like a yo-yo in the past 15 months. The chart below clearly shows what has been happening with this currency and what I think we could see very soon.

The blue support zone (73-74) is a key pivot point for the dollar. That being said lets take a look at the chart.

During the time when the price is trending higher July 2008 – Feb 2009 we see lower wicks appear more often. This tells me that sellers pushed the price down early in the week but were then overcome by buyers nearer the end of the week. This is bullish price action. Also the broadening patterns during this timeframe’s tops indicate increased volatility and we know that is a sign of weakness.

From March 2009 – Sept 2009 the trend was down and there are longer upper wicks telling us buyers became over powered by sellers each time the price rallied.

In the recent 3 months we observe lower wicks meaning buyers are moving into the US dollar again. Knowing that there is major support below the current price I have to think the dollar could start to bottom around this level.

US Dollar Trading

US Dollar Trading

Trading Conclusion:
The broad market is becoming unstable and looks like it could have more of a pullback this week. I would not be adding to any long positions until we see the market trading near support. Three out of four stocks move with the market so it is crucial to understand the overall market direction when buying and selling stocks and commodities.

Gold is trading at a level which is fuzzy. The weekly chart is neutral and the daily chart is still on fire as it moves up. All we can do is ride our positions and keep raising our stop prices.

The US dollar could start to bottom over the next few weeks. Depending what happens with Dubai this week we could be in for a big bounce in the dollar as investors flock to safety as the US dollar is still the currency of choice if/when other countries start to have a financial melt down again.

If you would like to receive my free weekly trading reports join my newsletter:

Chris Vermeulen
www.TheGoldAndOilGuy.com